case study: drawing lessons and emerging good …...case study: drawing lessons and emerging good...
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Case Study: Drawing Lessons and Emerging Good Practices from Renewable Energy
Projects in the Arab Region
Workshop on “Access to Finance for Municipalities – Nexus Thinking and Decentralization of Subnational Governments”
The St. Regis Amman Hotel, Amman, Jordan – 29-30 January 2020
Khaled Bedoui, ESCWA Consultant
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Nexus In Municipalities
Energy
AgricultureWater
But What Kind of projects….??
Municipality responsables
© Copyright ESCWA. All rights reserved. No part of this presentation in all its property may be used or reproduced in any form without written permission
Some Small scale Nexus projects
Solar Water Desalination for water drinking and agriculture
The using of solar thermal Energy for
desalination
The Arab region is one of the world’s most water-scarce and dry regions; agriculture is consuming an average of 80% of available water resources
Non Conventional water resources : desalination, the reuse of TWW
© Copyright ESCWA. All rights reserved. No part of this presentation in all its property may be used or reproduced in any form without written permission
Technical Overview Municipal W Water
The Reuse of TWW in Agriculture
OR
Biogas
The reuse of treated wastewater in Agriculture
Jordan: Biogas for Wastewater Treatment and Reuse in Agriculture A PPP Model
The business model is based on a Public Private Partnership (PPP) to finance the construction and operation of public infrastructures based on Build Operate Transfer (BOT) contract for 22 years.
The annual average energy consumption of the activated sludge system at Khirbit As-samra plant was around 61.58 GWh in 2014. The plant has achieved a self-energy sufficiency of 78-90% between 2009 and 2014.
This energy saving is achieved by utilizing renewable energy resources including hydraulic energy and biogas produced through anaerobic
digestion.
Jordan in utilizing of renewable energy for wastewater treatment at Khirbit As-samra wastewater treatment plant in Jordan which is reused in Agriculture
TWW is reused to irrigate the largest irrigated area using TWW in Tunisia: Borj Touil Area
( Private Farmers)
more than ( 3100 Ha)
Tunisia: Biogas for Wastewater Treatment and Reuse in Agriculture
Chotrana WWTP
The Use of Solar Energy for
Groundwater Pumping in
Agriculture
Rapidly growing prices for fossil pumping installations, with rapid
and often radical phase-out of power and diesel subsidies for
farmers and agro-industries across the region.
Growing supply bottlenecks in many countries of the region for
diesel and power for on-grid pumps.
The extension of farming and hence irrigation into remote regions
unconnected to the grid.
The quickly dropping costs of PV panels as well as the improved
technical performances of the solar pumping technologies
Why This Technology
Impacts of SPIS: Benefits and Risks
Impacts of SPIS (Economic, job creation, farming competitiveness, smallholders, social, …)
Extremely low operating cost
Comparatively low maintenance
Simple and highly reliable systems
Reduced dependence on electricity and fuel
Through the improved access to water resources, SPIS allow the development of unused
agricultural areas at a reasonable price
More income generating opportunities
Mitigation and adaptation technology
Reduce rural Migration
SPIS: Main risks03.02.202011
The Risk of Water Over-Abstraction
It is important to note that SPIS – if not adequately managed and regulated – bear the risk of supporting unsustainable water use. The increased use of solar pumps might encourage greater waterextraction and therefore lead to the over-exploitation of groundwater.
Other financial risks or challenges need to be addressed, such as:
• SPIS still requires a relatively high initial investment cost that smallholder farmers
cannot afford. Small farmers also cannot tolerate the risk associated with the
investment.
• Financing mechanisms are not accessible or affordable for all, especially for
smallholders and tenant farmers
Economic Aspects of SPIS Systems
Economic Profitability of SPIS
Highly profitable compared to Disel Pumps
Payback priode between ( 1 and 4 year)
Economic Profitability of SPIS
profitable compared to Conventional electricity
Payback priode between ( 5 and 7 year)
But…
03.02.202013
SPIS: RE Subsidies VS Conventional energy Subsidies
Tunisia (Incentive mechanisms for SPIS vs Conventional electricity subsidies) Even
with incentive mechanisms (direct subsidies) in place, SPIS are not profitable
compared to highly subsidized electricity for pumping and irrigation
Morocco : The illegal use of subsidized bottled butane by farmers, which is intended
for domestic use, represents the biggest constraint to a large-scale deployment of solar
pumping systems.
For small plots, the payback times are even greater than 10 years, compared
to butane and electricity for plots of less than 1 ha.
03.02.202014
Incentive Mechanism for small scale renewable energies
(Comparative Analysis for Jordan, Lebanon and Tunisia)
Policy Analysis of Small scale renewable energies (Comparative Analysis for the Jordan, Lebanon, and Tunisia )
03.02.202015
Jordan, Lebanon, and Tunisia all have clear energy policies with nationalobjectives in the medium- and long-term, based mainly on largerenewable energy projects (PV, wind).
Countries have identified set targets as part of their nationalrenewable energy plans or sustainable energy strategies, be thesemedium-term (2020s) or long-term (2030s) targets.
However, none of these countries has a specific policy for the
promotion of small-scale renewable energy as an income
generation activity ( for agriculture, water pumping, …)
03.02.202016
Incentive Mechanism Analysis of SPIS
(e.g. value added tax, customs duty exemptions) do exist for imported renewable energy equipment in all countries
Indirect Financial Subsidies : Fiscal incentives
Direct SubsidyExp: Tunisia
This model offer farmers more reliable and affordable energy + reduce power subsidy
burden on government
Energy Transition Fund
Tunisian Investement Fund
Tow Incentive Funds
Because of the high investment cost Subsidies is not reaching small
Farmers
More Integrated Fund : Water, Energy, Food …
Non Subsidy/Open Market Model
This model will guaranty the share of farmers in the investment and unfortunately it
represents a barrier for small farmers. Only big framers having financial facilities
could have their projects.
Lebanon has a national financing mechanism initiated by the Central Bank of Lebanon
(Banque du Liban-BDL) dedicated to the financing of green energy projects in Lebanon,the
"National Energy Efficiency and Renewable Energy Action" (NEEREA). green loans : is
offered at an interest rate of 0.6% for period that should not exceed 14
years, including a grace period of 6 months to 4 years
EXP : Lebanon
03.02.202019 Financial Mechanism For Small scale Nexus Projects
Exp : In Egypt and Tunisia: SPIS financed by the SPIS
supplier or through informal lending.
This can be convenient for farmers, who can pay at the end of the harvest time
But it is Used also to finance SPIS on illegal wells the case of Tunisia
Informal lending Mechanism to Finance Small scale Nexus Projects
03.02.202020
• Many small farmers are not able to spare the cash to pay the higher initial investment ofthe SPIS..
• There is an absence of a specific, innovative and dedicated financial mechanisms forsmall-scale farmers and rural woman
• Local commercial banks have limited knowledge of the viability of small-scale renewableenergy projects at the Local/Rural level
• Private banks might be unwilling to give cheap loans to small-scale farmers due to thehigh risks involved
• Absence of micro finance and leasing institutions in the financing of Nexus Projects
• Some rural areas are located very far away from bank branches, and some local farmerslack experience in dealing with banks and loans and therefore prefer informal savingschemes such as revolving funds or informal loans
Financial challenges & opportunitiesFor small scale Nexus Projects
03.02.202021
Reviewing subsidies system in order to include small farmers and rural women
Encourage financial institutions to implement low interest loans and grants
Awareness and capacity building for banks and micro finance institutions
Rethinking pricing schemes of the three resources needs to be undertaken in a holistic
approach that takes into considerations the complexities of inter-linkages.
Guidelines and Recommendations to promote Small scale Nexus Projects Incentive mechanisms
Encourage the Use of the Leasing Mechanism ( rent to own) for the finance of small
scale RE systems
Thank you
Khaled Bedoui, ESWCA Consultant